Retail F&O Trading Defies Sebi Curbs

Sebi has noted that individual participation in index options within the derivatives segment hasn't decreased as anticipated. A comprehensive review may lead to additional regulatory measures, sources revealed to PTI.

Analysis of Trading Activity

Examining data from December 2024 to March 2025, Sebi observed a year-on-year decline in trading activity. However, levels remain significantly higher compared to two years prior, indicating persistent high engagement among retail traders.

Concerns Over Speculative Trading

Index options, especially on expiry days, continue to be a focal point due to rampant speculation. Despite a 5% drop in premium terms and a 16% decrease in notional terms year-on-year, volumes have surged by 34% and 99% respectively from two years ago.

Future Regulatory Steps

"Sebi plans to reassess individual trading in index options, focusing on investor protection and systemic stability," a source mentioned. The regulator aims to balance market growth with enhanced risk monitoring to safeguard against speculative overtrading.

Global Leadership in Derivatives Trading

India maintains its position as a global leader in derivatives trading volumes. The rapid growth underscores the need for advanced risk monitoring mechanisms to ensure market integrity.

Refining Market Regulations

Sebi's efforts include improving exposure assessment, reducing manipulation risks, and avoiding market disruptions. A recent consultation paper highlighted the importance of surveillance over blanket regulations to foster healthy market-making.